Enterprise data must be stored somewhere. While cloud-based data center management has rapidly gained in popularity for businesses of all sizes in recent years, many enterprise organizations continue to rely on physical data centers managed at their business location, or at a separate facility privately owned by the company.
While this strategy may have been backed by a strong business case in the past, the improved scalability and resource efficiencies of cloud and SaaS alternatives has changed how businesses now calculate the cost and ROI of traditional data center models—especially when it comes to acquiring and maintaining the necessary real estate to house and protect these facilities.
The challenges of physical data centers become even more pronounced as enterprise organizations grow—or, in many cases, as the volume of proprietary and private customer data protected by their business increases. As business operations become more data-driven, data management becomes more integral to supporting those operations, managing operating expenses, and delivering a customer experience that retains and grows a company’s customer base.
This data-driven transformation can face significant challenges when faced with the practical limitations and cost considerations of the physical real estate required by on-premise data centers. To free your organization of these constraints and enable transformation, innovation and scalable growth, it will eventually become necessary to break out of this traditional approach and migrate to cloud or SaaS-based infrastructure.
The Cost and Constraint of In-House Data Centers
The cost of maintaining an in-house or physical data center must be accounted for in two different ways. First, there is the operational cost of building, maintaining, and adapting these facilities over time. In addition, businesses must also consider the opportunity cost that comes with rigid data center infrastructure, particularly when growing your business or innovating business operations to embrace a more data-centric approach. These costs and constraints include:- Physical real estate. Whether the data center is housed at an existing business property or a separate location, this space must be purchased or rented.
- Hardware and supporting infrastructure. Estimates for building an enterprise-grade data center can range between $8 million to $12 million.
- Staffing to manage and monitor the facility. This includes IT professionals, or third-party service management vendors, to manage and maintain the data center technology itself. It also includes facility staff dedicated to securing the site and monitoring for outages or mechanical breakdowns.
- Utilities, including electricity to power the data center. Depending on its size, your data center electricity bill could be one of the largest bills your company pays on a monthly basis.
- High costs when expanding your data center. If you outgrow your space, the cost of acquiring and transitioning to a larger one can be high and potentially delay this necessary upgrade. Similarly, the cost of hiring new staff can spike your expenses and cut into the ROI of managing your own facility.
- Increased liability for facility shutdowns, security breaches, or other disruptions. Since you are managing the data center on your own, the cost of security response, switching over to backup generators, and maintaining business continuity are all footed by your company, rather than a cloud-based partner.